implications on BESS costs.
BESS technical specifcations
should always be considered
using at least two of these
three parameters, although
information that has been
widely disseminated typically
does not go into detail about
this key concept.

This differentiation is
refected in the fnancial drivers for these two contrasting
types of services. Frequency
response services are commonly remunerated based on
the number of hours over a
given period that (
dis)charging power is available for
providing response, with a
minimum (dis)charge time
requirement. In contrast,
bulk time-shifting services
are generally paid based on
the energy delivered.

Te Revenue Stacking – A Crucial Piece of the Puzzle

The ability to use a single or multiple aggregated BESS to providemultiple services is referred to as “revenue stacking.” With rev-enue stacking, developers can extract more value from the BESSand grid connection, because they now have two or more sourc-es of income based on their project.

However, understanding the revenue stack is diffcult and comes with
relatively little understood contractual and fnancial risks, as well as
additional technical and operational
complexity.

The relative power and storagecapacity requirements have impor-tant cost implications. These areoften overlooked as quoted bat-tery cell or BESS costs only considerthe costs per unit of energy storagecapacity ($/k Wh) or per unit of power($/k W). The cost of the battery cells(per unit of energy storage capac-ity) and the PCS (per unit of power)should both be considered, as wellas the Balance of Plant costs. Although this adds a layer of com-plexity, this is crucial in gaining a full understanding of the rela-tionships between the intended services, technical specifcations,capital costs and revenue streams.

The technical and commercial aspects of relative power and
storage capacity need to be considered in order to derive a business case for energy storage that provides optimal return on
investment. When adding storage behind-the-meter using an
existing grid connection, at a wind farm, PV plant or large industrial consumer, storage can provide additional revenue or cost
reduction opportunities. Grid support services such as frequency
response will allow a higher proportion of renewable energy to
be connected to a grid.

Diligent specifcation, evaluation and optimization of these
arrangements, as well as compliance with relevant permitting,
regulatory and subsidy frameworks, are key to manage risk and
increase investor confdence in this emerging market. à

Thomas Houlding is a renewable energy consultant in
SgurrEnergy’s solar team and is based in Glasgow.

Examples of three combinations of BESS (dis)charge power and
time. The shaded areas represent the energy storage capacity, all
three equivalent to 1 MWh.